CHINESE stocks today collapsed with hundreds of firms plunging by the maximum 10% as investors get their first chance in more than a week to react to a barrage of bad news from the spiralling coronavirus outbreak.

The benchmark Shanghai Composite Index ended the morning session down 8.13%, or 241.87 points, at 2,734.66, while the Shenzhen Composite Index, which tracks stocks on China’s second exchange, dipped 8.3%, or 145.78 points, to 1,611.04.

Hong Kong went into the break 0.09%, or 23.78 points, up at 26,336.41 on bargain-buying after being battered last week.

The scale of the plunge is remarkable even by the standards of China’s notoriously volatile share markets, indicating deep concern over the economic impact of the epidemic, which has now killed more people than SARS, or Severe Acute Respiratory Syndrome, in 2003.

The last time Chinese indices plunged in excess of 8% in a day was when an equities bubble popped nearly five years ago.

“Investor panic quickly spread across the board and will be dominating the market over the short term,” said Yang Delong, chief economist at First Seafront Fund.

More than 2,600 stocks fell by the 10% daily limit, according to Bloomberg financial data.

The yuan also weakened more than 1.5% to 7.02 to the US dollar.

Markets in the world’s second-biggest economy closed on January 24 for the week-long Lunar New Year holiday, but in that time, the viral epidemic that started in Wuhan spread globally.

They were scheduled to reopen last Friday, but the government extended the holiday to help deal with the virus.

Stock markets worldwide have sunk as major corporate names froze or scaled back their Chinese operations, threatening global supply chains that depend heavily on the country.

‘Large’ economic impact

China’s central bank said it will pump 1.2 trillion yuan (RM700 billion) into the economy today to help stabilise markets.

Yang said an interest rate cut is also “urgent and necessary”.

Volatility will reign until there are clear signs that the coronavirus is contained, analysts said.

Travel and tourism shares plummeted after domestic and international travel curbs were imposed to slow the virus.

China International Travel Service fell 10% to 73.80 yuan shortly after the open.

Individual Chinese stocks can move only 10% in either direction each session before being suspended, a measure intended to limit volatility.

Foxconn Industrial Internet, an arm of Taiwanese tech giant Foxconn, was also limited down at 18 yuan.

Foxconn has closed its Chinese factories until at least the middle of next month, potentially affecting supply chains for tech companies that rely on it for everything from Apple’s iPhones to flat-screen TVs and laptops.

China Southern Airlines and China Eastern Airlines, too, were suspended after diving 10%.

Consumer bellwether Kweichow Moutai, the world’s largest distiller and whose fiery liquor is a favoured Lunar New Year gift, fell 5.27% to 997.30 yuan.

Many healthcare stocks gained, however, as the Chinese rush to stock up on face masks and other medical supplies.

Shares in Shanghai No. 1 Pharmacy and China Meheco were both suspended after surging 10%.

China’s benchmark iron ore contract declined by its daily limit of 8% today, and copper, crude and palm oil also sank by the maximum allowed, according to Bloomberg News. – AFP, February 3, 2020.